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Kemper and the 'Fairness Police'

The Kemper plant cannot run without natural gas. It uses natural gas for startup, turbine optimization, steam generation, byproduct recovery, and other operations. It burns about 30% as much natural gas for the same amount of electricity sold as the simpler, cheaper, proved natural gas fired combined cycle turbine generator in widespread use. So it does not protect against gas shortages.

OK, supporters say, forget about shortages. If Kemper uses 70% less gas, won't its electricity be cheaper if the price of gas price rises and lignite doesn't? Won't customers be better off then? Answers: only if the price of gas is high enough and Kemper's other costs are low enough. Both are so unlikely that Mississippi Power's dream or scheme looks surreal. But it's a real nightmare for customers.

Kemper's other costs depend on how much of its construction cost customers pay, if the plant operates reliably and efficiently, and if it recovers and sells byproducts at a profit. These other costs are all unknown. Yet Mississippi Power wants customers to pay for them anyway over seven years -- starting now with 20% higher rates. Seems absurd, doesn't it? That's because it is.

Diversification argument absurd.

Imagine you go to your neighborhood restaurant and prices are up 20%. You ask: "What's up?" Manager says: "It's our new Lignite Farms loyalty deal. Pay more for seven years (not sure how much, haven't decided yet) and less for the next thirty." You say: "So your prices will be lower after seven years?" He says: "No, truth is they will be higher. But they could still be a bargain if other restaurants are even higher." You politely say: "No thanks. Your deal is absurd. You think I'm stupid?" And you go to a restaurant down the street.

Now imagine you live in a town where the Restaurant Commission permits only one restaurant which has just been remodeled. Prices are up 20%. You ask: "What's up?" Manager says: "Lignite Farms loyalty deal." You ask: "How much more do I pay the first seven years?" Answer: "Don't worry bout it cause you got no choice anyway." You ask: "How do I know your prices will ever be a bargain?" He says: "Trust me." You ask: "Suppose I do, but am not around if they ever are a bargain?" He says: "Not my problem."



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Posted July 24, 2013 - 12:20 pm

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